Last 18 month witnessed large scale erosion in your market related investments. Worst hits have been the market related insurance policies from private insurance players.

 

On the other hand to improve the credit off take and enthuse liquidity in the system, Reserve Bank of India (RBI) has repeatedly cut the lending rates. As a result, the banks have been regularly cutting both deposit and lending rates.

 

These repeatedly rate cuts even made investing in bank FD less lucrative. Banks that were offering yearly returns of 10 -11 per cent are now offering only about 7.25 per cent.

 

These FDRs are still finding takers as in today’s uncertain markets as it is only option for risk-averse investors as the safety element is quite high. Non-convertible debentures and other bonds, small savings options like National Savings Certificates also became hot favorites of investors.

 

Victory of congress in the centre has revived hopes for the share market. Has the right come to invest in the stock markets? Would the share market be able to regain the lost glory? Congress has promised to come out with new budget by June. Would this budget be able to revive the stock market?

 

Answer to this may not be simple, but one thing is clear. Stock market will not move independently of markets in other countries mainly US and Europe. Of course, short term impact of the development in Indian marketplace would be positive. Unlike as was predicted, country would have stable government for next five years. The government did display its will power during signing of nuclear deal in the previous tenure. All these factors will definitely contribute to the overall sentiment in the markets, but the return of glory to the markets may take its own time.

 

As for the present, the bank deposit option may not be a great option. To boost the overall industrial sentiment, these rates may come down further but are unlikely to increase.

 

Looking at a slightly longer horizon, the markets are expected to head north wards, especially when the initiatives being taken by Obama start delivering the results.

 

Thus concluding, those willing to play safe may continue to park their FDs especially if they are parked in high rate of interest. The markets may peak to about 14000 levels or more by the year end but in a significant way it would be linked to global markets.